Rise in industrial diesel price hits sugar mills and mining sector

Sharp rise in industrial diesel prices raises transport and input costs, putting pressure on sugar mills' cash flows and mining operations across sectors

A steep rise in industrial diesel prices to about ₹112 per litre from ₹92.68 is set to squeeze sugar mills and push up mining costs, industry officials said, raising concerns over farmer payments and a broader increase in input prices.

 

The ₹19.32 per litre hike, effective immediately, will significantly increase transportation costs for sugar factories that rely on diesel for cane procurement and logistics, according to industry inputs. 

Mills operating beyond March 20 will have to absorb the higher fuel costs, putting pressure on cash flows and potentially affecting timely payment of the fair and remunerative price (FRP) to farmers. 

In a representation to the government, the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) flagged rising input costs and warned that fuel price volatility is weighing on the sector’s viability. 

The mining industry, where diesel forms a major share of operating expenses, warned of a wider economic ripple effect.

 

“In mining operations, the cost of high-speed diesel (HSD) accounts for 40-50% of its total operating cost of production. Increase in diesel price to the tune of 25% is bound to have adverse impact and would lead to cascading effect in terms of increase in input costs for the user industry of raw material and downstream products,” said BK Bhatia, director general at the Federation of Indian Mineral Industries.

 

Higher diesel costs could push up prices of key raw materials such as coal and iron ore, adding to cost pressures across sectors, including metals and infrastructure.

 

State-run oil marketing companies (OMCs) last week raised industrial (bulk) diesel prices by around ₹22 per litre, effective from March 20, 2026. The price in Delhi rose to ₹109.59 per litre from ₹87.67 per litre due to high global crude prices following the Iran war. The OMCs had also raised the prices of premium petrol by ₹2 per litre.